But the battle over SOPA is only the latest version of the cultural and business differences between the Internet and content industries, which have scuffled for years over a variety of issues with direct revenue implications for each industry.
Notably, both industries have key interests in content as an enabler or foundation of their businesses. But for “Hollywood,” content is the business. For Internet app providers, content is an input to the business.
And as turmoil in the music and print content businesses has shown, the Internet can dramatically affect the economics of creating, packaging and distributing content, as well as the business franchises that can be built on content.
Hollywood fears that those changes could also affect the video and film industries, and not for the better, in terms of revenue. Beyond that, there are some obvious cultural differences. Silicon Valley makes money by “disrupting” existing businesses, or creating new businesses. Hollywood tends to do better by sustaining its current business.
Silicon Valley is based on, loves and thrives by applying technology to the real world. Hollywood historically has fought technology, especially when it could not control and shape technology.
But Silicon Valley tends to overestimate the changes possible from technology changes alone. Silicon Valley tends to believe that what can be done, will be done. But content is a gatekeeper business, at least for Hollywood. Content at that level is a “high fashion” business, where technology plays only a supporting role.
“Necessary but not sufficient” is a good way to describe the growing infrastructure of devices, apps, connectivity and revenue models that create the foundation for potentially big shifts in the video entertainment business.
Wi-Fi capability is one of those underlying changes. Increasingly, home video entertainment devices such as digital TVs, Blu-ray players, game consoles, and all versions of set top boxes (STBs) are coming to the market Wi-Fi-connected.
In-Stat researchers predict that iin-home video Wi-Fi-enabled video devices will approach 600 million in 2015. More in-home Wi-Fi
About 40 percent of digital TVs will be able to use Wi-Fi by 2015, In-Stat predicts. More than 28 million WLAN-enabled Blu-ray players will ship in 2013.
But “necessary” technology does not, in and of itself, create a different context for the video and media businesses. Technologists tend to be “technological determinists,” believing that new technology that can enable new behavior will lead to new behavior.
That isn’t always the case, or necessarily the case. The problem with technology changing “old media” is that, ultimately, end users have to “stop wanting” the old media, or have to start showing they will pay incrementally more money to use older content in new ways.
In other words, so long as traditional, professionally-produced content remains in high demand, new technology will only enable the older revenue and packaging models to extend themselves into a new distribution channel. Think about the way “TV Everywhere” works.
To use video more flexibly, one first must purchase the older product (cable TV) to consume some of that video on a tablet, in one’s home.
What lots of people might prefer, the ability to buy content program by program, is not what content producers want to enable, because they cannot see how that is at least revenue neutral, or, at best, revenue enhancing.
It is more than people “wanting choices” about which devices, networks and contexts in which they can consume entertainment video, for example. Content owners will not change unless the greater flexibility desired by consumers also is a revenue-neutral to revenue-enhancing shift for the suppliers.
That means one of two things must happen: either people demonstrate that they will pay more for such capabilities, or they must start abandoning legacy packaging in sizable numbers. In the first scenario, new models win because providers make more money.
In the second scenario, providers decide they must move because the older model is losing customers and revenue to such an extent that a change will produce better financial results.
Technology, by itself, will not necessarily encourage new thinking on the part of content owners. Only significant “greed” (more revenue) or “fear” (lost revenue) will motivate significant potential change.
One way to put matters is that unless large numbers of people drop their current video subscriptions, and large numbers of younger consumers decide buying subscription video isn’t so valuable, we will not see significant change in retail pricing and packaging.
